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The Financial Accounting Standards Board (FASB) on Thursday issued a final update to clarify the effective date for its current expected credit loss (CECL) standard. Sharing credit unions' implementation concerns with FASB, NAFCU has worked to obtain certain changes and more guidance on the standard.

The CECL accounting standard requires financial institutions – including credit unions – to record expected losses whenever they make a new loan. This is causing concern within the industry as it could mean financial institutions may have to either raise more capital or lend less.

The final update makes clear that the implementation of the standard for non-public business entities (PBEs) is only required for fiscal years after Dec. 15, 2021. As a result, credit unions would not need to begin reporting data on call reports until the beginning of 2022. The update also clarifies that operating lease receivables are not covered within the scope of CECL – a clarification welcomed by NAFCU.

NAFCU continues to urge the FASB to coordinate with the NCUA on guidance and recently sent a letter to the NCUA outlining NAFCU's efforts to help address credit unions' CECL concerns and encouraged the agency to work with FASB "to reduce burdens on credit unions and alleviate industry uncertainty."

Financial institutions' CECL concerns were also brought up numerous times as Federal Reserve Vice Chairman of Supervision Randal Quarles testified before the House Financial Services and Senate Banking Committees this week.